Any CPAs up in here? Estimated tax question

[ruxCYtable]

The last couple years we've dipped into retirement to pay for college. I know you're not supposed to do that, but it is what it is. Because of that, we've been having to make quarterly estimated tax payments. This year we're supposed to pay $3600/quarter in estimated payments. My last kid graduated in December and we will not be doing that anymore. I'm expecting to have $60K less in taxable income in 2025 than 2024. Am I required to make those $3600 payments if I know my taxable income will be much less, or is there a way to file an adjustment to them?

 

[Gonzo]

@isufbcurt

 

[Gonzo]

I'm supposed to make estimated quarterly payments because of the schedule C income I make annually, but I never do. It's all contracted/freelance work that comes to me, I have a full time job so I'm not out hustling side gigs, I just get the work brought to me from past colleagues who want me on their projects. So I have no idea from quarter-to-quarter what I might make from that. Some quarters it could be $0. Other quarters it could be as much as $15-20k. I just don't know. So I don't make the quarterly payments and in the end it costs me a penalty of I think around $300 for the year. Not a big deal IMO.

 

[Die4Cy]

NOT A CPA!!!!!!!!!

Pretty sure you can send in whatever you want, provided you note it accurately on your 1040. They're estimate taxes and not technically due at all until the following April 15th. Nobody is tracking whether you pay the full amount or quarterly on time. They just want the money.

 

[ruxCYtable]

NOT A CPA!!!!!!!!!

Pretty sure you can send in whatever you want, provided you note it accurately on your 1040. They're estimate taxes and not technically due at all until the following April 15th. Nobody is tracking whether you pay the full amount or quarterly on time. They just want the money.

I like your thinking. I guess there's a calculator on IRS.gov so I will just put in what I think we will earn next year and if it says I don't need to I won't. I just don't want to incur a huge penalty for not paying money it well may turn out I didn't owe anyway. I just didn't know if I had to file anything to make it "official" or not. Sounds like not.

 

[Die4Cy]

I like your thinking. I guess there's a calculator on IRS.gov so I will just put in what I think we will earn next year and if it says I don't need to I won't. I just don't want to incur a huge penalty for not paying money it well may turn out I didn't owe anyway. I just didn't know if I had to file anything to make it "official" or not. Sounds like not.

I've paid estimate taxes three months late because I forgot, and also finding myself in a situation like yours where business income situation changed dramatically, opted to not make my last two payments so that the refund would be smaller come April. Never incurred any consequence either time.

Again, NOT A CPA!

 

[isufbcurt]

The last couple years we've dipped into retirement to pay for college. I know you're not supposed to do that, but it is what it is. Because of that, we've been having to make quarterly estimated tax payments. This year we're supposed to pay $3600/quarter in estimated payments. My last kid graduated in December and we will not be doing that anymore. I'm expecting to have $60K less in taxable income in 2025 than 2024. Am I required to make those $3600 payments if I know my taxable income will be much less, or is there a way to file an adjustment to them?

No you aren't required to pay estimated payments.

Really all they do is prevent you from getting assessed interest and penalties if you didn't pay enough during the year for your taxable income.

So if you know your income is going back down then there is no reason to make them.

 

[BCClone]

I like your thinking. I guess there's a calculator on IRS.gov so I will just put in what I think we will earn next year and if it says I don't need to I won't. I just don't want to incur a huge penalty for not paying money it well may turn out I didn't owe anyway. I just didn't know if I had to file anything to make it "official" or not. Sounds like not.

I’d you don’t file, you won’t have to pay. That will solve your question.

 

[Drew0311]

The last couple years we've dipped into retirement to pay for college. I know you're not supposed to do that, but it is what it is. Because of that, we've been having to make quarterly estimated tax payments. This year we're supposed to pay $3600/quarter in estimated payments. My last kid graduated in December and we will not be doing that anymore. I'm expecting to have $60K less in taxable income in 2025 than 2024. Am I required to make those $3600 payments if I know my taxable income will be much less, or is there a way to file an adjustment to them?

I took a loan out through my 401k so I could avoid paying taxes on it. I got a good interest rate that way.

 

[cycloner29]

Trying to figure out if should claim our son who was in school for 5 months as he graduated and lives at home now, or if he should claim himself on his taxes as he has worked the last 7 months of year.

 

[BCClone]

Trying to figure out if should claim our son who was in school for 5 months as he graduated and lives at home now, or if he should claim himself on his taxes as he has worked the last 7 months of year.

If school was college, one factor is the college credit. You get a 2500 tax credit for college tuition. Credit not deduction. If you paid for college I would factor that in to whoever gets the most back.

 

[CycloneDaddy]

If school was college, one factor is the college credit. You get a 2500 tax credit for college tuition. Credit not deduction. If you paid for college I would factor that in to whoever gets the most back.

Doesnt that phase out depending on income levels?

 

[isufbcurt]

Trying to figure out if should claim our son who was in school for 5 months as he graduated and lives at home now, or if he should claim himself on his taxes as he has worked the last 7 months of year.

Do it whatever way works out best overall.

I just did this for a client yesterday.

 

[CoachHines3]

just send the money to me

 

[BCClone]

just send the money to me

And the moneyshot to your mom.

 

[cycloner29]

just send the money to me

Pimpin ain't easy!

 

[BCClone]

Doesnt that phase out depending on income levels?

Yep, I’m poor so I have no idea when it happens.

 

[NWICY]

just send the money to me

I left your mom a tip on the nightstand.

 

[BCClone]

Now IRL if Hines happens to be tailgating and his mom is there, if someone asks him if he’s on CF, he’s gonna have to lie or give the wrong username or else his mom will wonder why everyone’s smiling at her.

 

[83cy]

Doesnt that phase out depending on income levels?

Yes it does.